SHARES

MAS Real Es­tate, Work­force, AVI, SA Cor­po­rate Real Es­tate, Ju­bilee Plat­inum

Financial Mail - Investors Monthly - - Contents - Alis­tair An­der­son

SA Cor­po­rate Real Es­tate is a di­ver­si­fied owner of in­dus­trial, re­tail, com­mer­cial and res­i­den­tial build­ings lo­cated pri­mar­ily in SA’s large met­ro­pol­i­tan ar­eas, with a sec­ondary node in Zam­bia.

The com­pany said in its most re­cently re­leased re­sults that it had grown its div­i­dends 4.4% in the six months to June. The com­pany de­clared a div­i­dend of 22.38c/share, from 21.44c/share for the cor­re­spond­ing pe­riod in 2016.

The six-month per­for­mance was af­fected by non­re­cur­ring in­come, re­sult­ing mainly from a re­cov­ery of writ­ten-off bad debt and in­creased va­can­cies in the com­pany’s res­i­den­tial port­fo­lio.

SA Cor­po­rate was ini­tially weighted to­wards re­tail and in­dus­trial nodes, but it has in­vested in res­i­den­tial real es­tate in re­cent years. Net prop­erty in­come in­creased 13.8% dur­ing the re­port­ing pe­riod.

Its res­i­den­tial prop­erty pipe­line is par­tic­u­larly ex­cit­ing. Last year SA Cor­po­rate and de­vel­oper Cal­gro M3 formed a joint ini­tia­tive through Afhco, a wholly owned sub­sidiary of SA Cor­po­rate, and Hi­zoscape, a wholly owned sub­sidiary of Cal­gro M3, re­named Cal­gro Real Es­tate.

Cal­gro M3 MD Wikus Late­gan ex­pects Cal­gro Real Es­tate to be worth about R15bn in the next five years. He puts the hous­ing short­fall in met­ro­pol­i­tan ar­eas at close to 2m units.

“De­spite gov­ern­ment’s com­mit­ment to clos­ing the gap, spend­ing on in­fra­struc­ture for hous­ing devel­op­ment is un­der pres­sure,” he says. “This joint ini­tia­tive will help gov­ern­ment im­prove liv­ing con­di­tions for or­di­nary South Africans.”

SA Cor­po­rate CEO Rory Mackey says the Afhco brand has en­trenched it­self as a dom- inant, trusted res­i­den­tial rental brand of choice that pro­vides qual­ity and af­ford­able ac­com­mo­da­tion in the Jo­han­nes­burg in­ner city.

Mackey has done a good job, says Craig Smith, head of re­search at An­chor Stock­bro­kers. “He is close to his port­fo­lio and a good deal maker. The res­i­den­tial port­fo­lio has, how­ever, come un­der a bit of strain over the past six months, but in the long term it’s still an at­trac­tive sec­tor.”

Kelly Hook, an in­vest­ment an­a­lyst at Me­tope In­vest­ment Man­agers, says SA Cor­po­rate con­tin­ues to de­liver solid per­for­mances on its tra­di­tional port­fo­lio. “The re­tail port­fo­lio in par­tic­u­lar per­forms well. The com­pany con­tin­ues to look for av­enues to strengthen and di­ver­sify its in­come streams, in­clud­ing an in­vest­ment into the self-stor­age sec­tor.”

As far as mid-cap prop­erty groups go, SA Cor­po­rate stands out as one that will grow care­fully in SA and re­ward in­vestors with healthy div­i­dends. It owns 50% of two re­tail as­sets and an of­fice park in Zam­bia.

For the com­pany’s 2017 fi­nan­cial full year, dis­tri­bu­tion growth of about 6% is ex­pected. This is at the lower end of guid­ance given at the be­gin­ning of the year.

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